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Hong Kong non-executive director

The non-executive director is a person who is a part of the board of directors in the company.

The nominee director, a non-executive independent director, is a person who is a part of the board of directors in the company. However, the non-executive director has no authority for the company in making a corporate decision. Moreover, the company directors have additional privacy, as their names will not appear on the Articles of Association, share certificates or other company filings when the non-executive director is appointed.

Requirements of Directors and Company Secretary of a Hong Kong Company

A private limited company needs to have at least one director and one company secretary. The director has to be a natural person, which means that the person has to be an individual. Moreover, the sole director of a company cannot be the company secretary as well but can be the sole shareholder or a shareholder. A corporate body may appoint an additional company director, or nominate one after the company as been incorporated.

A public company or a company that is limited by guarantee has to have a company secretary. Along with this, it needs to have at least two directors in the company, from which one of the directors can be the company secretary as well. In this case, one of the directors can be a corporate entity. Though, this type of company is not normally sought after and a private limited company is the most common one since it is easy to start without many formalities.

The director also needs to be a natural person, which means someone who has their own legal personality, while a private company needs to have at least one natural director in the board. Even though there isn’t a maximum limit for the number of directors, the company can place an appropriate limit for the firm. The directors of a public company would normally need financial management expertise or the relevant professional qualifications to be appointed, while the company has to have a non-executive director as at least one-third of its board as per the Hong Kong regulations.

Additionally, if the company secretary is a natural person, this person has to be someone who is a resident of Hong Kong. The address of the entity’s registered or principal office address needs to be in Hong Kong. Other than this, there is no specific requirement that is under the Companies Ordinance that the director has to be a Hong Kong resident. The director can be from any nationality and can run the company sitting in any country, as far as the rules and regulations are followed regarding the board meetings, mandatory government filings and other matters regarding the company.

Are non-executive or independent directors recognized or required?

The Companies Ordinance does not strictly differentiate between non-executive directors and the executive directors. The Corporate Governance Code and the Listing Rules recognize the importance and value of the independent non-executive directors. These are those directors that provide advice on policies and the strategies of the company without being directly included in the daily activities of the business. They are not restricted to only people from Hong Kong, and can be directors from anywhere in the world to be appointed for the company.

Non-executive directors are responsible to the same liabilities and duties as any other director. These factors include the duties that need to be executed by the concerned director, if they are a part-time non-executive director or full-time executive director and also their relevant knowledge and skills.

The Board composition

There is no legal minimum number of independent non-executive directors or non-executive directors for a company. But as per the listing rules, any company that is listed as a public company, needs to have at least three independent non-executive directors with at least one that has the right expertise and qualifications. Also independent non-executive directors have to represent about one-third of the company’s board for these public companies. The requirements for private companies are less restrictive, and allow for non-executive directors to be a majority of the board composition.

Independence of an independent non-executive director

As per the listing rules to assess the independence of the non-executive director, a list of business needs is used to analyze a few things about the director. This includes things like if the director has any business relationship with or has any interest in the firm or the main people connected. Other factors may be considered when determining independence of non-executive directors.

Responsibilities of Non-executive Directors

Even though the non-executive and the executive directors have fiduciary responsibilities towards the shareholders, their roles are strictly discrete within the company. The non-executive Director normally has a supervisory role to make sure that a stable support for good corporate governance is given to the group and have to:

  • Generate a balanced understanding of the views of the shareholders, since the ideas may render several outlooks on the performance of the Group.
  • Work on director nomination and removal, remuneration and compensation plan, audit and other governance.
  • Lead the discussion when any possible conflicts of interests arise concerning circumstances where the broader interests of the Group and the particular interests of the management.
  • Confirm for the financial reports, audit reports and other records to the shareholders are sufficient. This may include signing off of these documents as representatives of the company.
  • Illustrate the financial knowledge needed for understanding the tasks of the Group and associated risks.

Note that these are general responsibilities for a non-executive director of a firm. These responsibilities included may be more or less for your company, depending on the arrangement with your appointed non-executive director, as well as the nominee shareholder. For example, they may be for managing the necessary filings as a representative non-executive director of the company, or provide advice on the company structure.

Note: We don’t offer Hong Kong non-executive director.